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1 Nov 2005, 11:45 (Ref:1449295) | #1 | |
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Report: CC Buys Toronto
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1 Nov 2005, 12:12 (Ref:1449312) | #2 | ||
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"The Molson Indy has been Toronto's most successful single sporting event -- averaging just over 160,000 fans in its 20-year run on the temporary street course that utilizes Lake Shore Blvd. and the Canadian National Exhibition grounds."
Smart move from Champ Car, I guess it was there only move with a race of such importance. |
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1 Nov 2005, 13:00 (Ref:1449351) | #3 | ||
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Nice way of preventing the race being poached by another series, and of ensuring that a popular race survives, and something that becomes an option when you have multi-millionaires running the series. How long would the reported cost of $20m take to recoup at current rates?
It may be Toronto's biggest event, but it's still 'Other Sports' according to their Sun newspaper. |
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1 Nov 2005, 13:05 (Ref:1449357) | #4 | ||
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They really had no other option but to purchase this event.
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Don't make a fuss, just get on the bus! |
1 Nov 2005, 13:11 (Ref:1449364) | #5 | |
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Agree, macdaddy. The question now is, which is the next independent promoter to bail? Denver? Surfers? Montreal?
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1 Nov 2005, 14:11 (Ref:1449416) | #6 | |||
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CC won't have the option of buying Montreal; Legault won't give that up. Denver?
I agree that they had no other option but to purchase it. Interesting, CC isn't purchasing Molson Sports and Entertainment, but Quote:
The SARS thing is a joke, surely? CDC lifted their travel ban July 8, just a week before the race. I remember people still being wary leading up to the ALMS race in mid August. |
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... Since all men live in darkness, who believes something is not a test of whether it is true or false. I have spent years trying to get people to ask simple questions: What is the evidence, and what does it mean? -Bill James |
1 Nov 2005, 14:21 (Ref:1449429) | #7 | |
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According to the report the TV rights aren't included, which makes the price seem even higher. Indycool raises a fair point - for all the hype about ChampCar improving, it says a lot that this is the only way it can save one of its classic money-spinning races.
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1 Nov 2005, 14:51 (Ref:1449451) | #8 | ||||
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Quote:
Quote:
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... Since all men live in darkness, who believes something is not a test of whether it is true or false. I have spent years trying to get people to ask simple questions: What is the evidence, and what does it mean? -Bill James |
1 Nov 2005, 16:59 (Ref:1449563) | #9 | |
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I don't know why Molson would give up its TV arm and why CC would want it. Molson's TV arm is strong in Canadian sports and that's not really a focus of CC's seeming aspirations.
As for the price for the race, that's in the Toronto Sun and could well be Canadian dollars, which would equate to about what Aquarium Assets paid for Long Beach in U.S. dollars. And I think Molstar TV would be worth more than that combined with the race. Just IMO. |
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1 Nov 2005, 18:59 (Ref:1449665) | #10 | |||
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Quote:
$3,000,000 - the rumored sanction fee that CC will not have to pay to itself. $9,000,000 - estimated gate revenue (70,000 @ $130 average weekend ticket) $?,???,??? - unknown sponsorship, TV rights, and advertising revenue for the event. It would be fair to say that the revenues for the event would be in the range of twelve to fifteen million in local currency, all of which is available for CC to use for expenses related to the race. The unknown is what it costs to put the event on, and market it. A typical business acquisition values the business on average at six times earnings. Other considerations are made to address the state of the market, future costs, etc. In a typical transaction that would mean that the event should turn a profit of about $3,000,000 per year, but only the amigos know what the numbers really look like. |
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1 Nov 2005, 19:19 (Ref:1449681) | #11 | ||
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Excellent info AC. Keeping in mind that revenue isn't the same as profit, but the info brings into context the overall value of the event.
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1 Nov 2005, 20:16 (Ref:1449739) | #12 | |
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Pretty good analysis, Ac. One element, though, remains a mystery. Between the predicted $3,000,000 event profit and the non-existence of a $3 million sanction fee in that scenario, it's a "wash" which pocket the $3 million goes out of and into. It also doesn't address the element of leverage Molson -- like Dover -- held of considering a move to IRL, which may have elicited a premium, like Dover did with Long Beach.
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1 Nov 2005, 21:49 (Ref:1449837) | #13 | ||
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Was there some leverage? Perhaps, but if $20M doesn't seem like that much of a stretch. How much of a premium could Molson have possibly extracted? If maximum price was desired, why wouldn't Molson open it up to bids to force CC to outbid TG and the Frances? I would presume it was because they wanted to keep the race in CC's hands and thus probably didn't charge a large premium.
If the TO race was making only a small amount of money, in CC's hands the race's position improves by $3M. In other words CC can run the race in a more cost effective manner than anyone else. That doesn't mean it's a free $3M, the event would still have to not lose money relative to the way it has performed of late. |
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1 Nov 2005, 22:00 (Ref:1449843) | #14 | ||
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True from an event standpoint, but the sanction loses out that $3M. From an ownership perspective it's a wash.
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... Since all men live in darkness, who believes something is not a test of whether it is true or false. I have spent years trying to get people to ask simple questions: What is the evidence, and what does it mean? -Bill James |
1 Nov 2005, 22:12 (Ref:1449863) | #15 | |||
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Quote:
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1 Nov 2005, 22:23 (Ref:1449877) | #16 | ||
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If it will take them anythign up to 6 years to recoup what they spent on the event in profit (remember to factor in that they could've done quite a bit else with that $20m, and that they're potentially losing getting a $3m sanctioning fee from someone else), it seems like a gamble, but a positive one and a sign that everyone in the ChampCar scene is confident.
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1 Nov 2005, 22:30 (Ref:1449887) | #17 | ||
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Here are some additional figures from the Edmonton Race this year that may help put this deal into perspective.
Race Budget $15,000,000 One Time Expenses $3,500,000 - paving, concrete barriers, etc. Sponsorship 2005 $1,800,000 Sponsorship budget 2006 $5,000,000 Grandstand cost $40 per seat x 43,200 = $1,728,000 It sounds like these are yearly rental costs? The promoter anticipated recouping about 90% of their costs this year, or a loss of about $1,500,000. Considering an anticipated increase in revenue of $3,000,000, and a decrease in one time expenses of $3,500,000, the promoter would be in a better position by $6,500,000 in 2006, for a profit of $5,000,000. Not bad for year two. This is as close an insight as we will likely get to the finances of a race promoter, and given the similarity to Toronto we can make the presumption that the numbers would be similar. Here is the URL to the article. http://www.canoe.ca/Slam/Columnists/...f-1138170.html |
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1 Nov 2005, 22:30 (Ref:1449889) | #18 | |
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It's anyone's guess how much profit Molson has generated from the race. A Molson exec a couple years ago said the race itself actually lost money, but as both sponsor and promoter, the exposure gain made it viable in the advertising area. CC doesn't have that dual advantage of exposure and some revenue.
As far as leverage goes, CC was most probably the only bidder. As in the case of Long Beach, it was "buy it or lose it" because the race owner/promoter could merely hold the threat of offering the sanction to the IRL and keep it to extract a purchase price. Internally, Dover valued Long Beach at $10 million.It got $15 million, a $5 million "premium" because CC needed the race more than anyone else did. TG offered to SANCTION Long Beach, not buy it. It's anyone's guess if the IRL was in play in Toronto, but it didn't even hafta be for the card to be played. As I posted earlier, IMO, who is the next independent CC promoter to look at Long Beach and Toronto and say to themselves, "let's see what OUR event is worth to 'em?" |
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1 Nov 2005, 23:13 (Ref:1449926) | #19 | ||
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Some excellent posts, Ac.
Back to "Molstar"... I doubt very much if it was included in the sale. A thread a few weeks ago made reference to a report that it was not. And Molstar is distinctly-Canadian, the Tres Hombres would have no use for it unless it was a money-making venture. I've found the two other threads regarding this topic. (I'll close them and we'll continue from here) "Molson to Dump Toronto and Montreal?" and "Goodbye Molson?". |
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3 Nov 2005, 11:11 (Ref:1451217) | #20 | |
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4 Nov 2005, 12:31 (Ref:1452054) | #21 | |
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Strange. The Toronto Star broke the initial story about it, then has had nothing since. The Globe and Mail has had nothing at all. McNulty has followed it in The Sun and has the only story today that it's a done deal and the name "Indy" is no more.
http://www.torontosun.com/Sports/Oth...92381-sun.html |
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